Archive for the ‘Retirement’ Category
7 Reasons to Rollover Your 401(k) After Retirement
Posted: October 26, 2012 at 6:46 am
After retirement, you need to decide whether you should roll over your 401(k) to an IRA. Once you are no longer working at a company, it's often a good idea to move your money to a retirement account that is not tied to your former employer. Here are seven reasons to rollover your 401(k) to an IRA:
Cashing out is a bad idea. On each withdrawal you'll have to pay tax (marginal rate) on the lump sum and a 10 percent penalty if you're under age 59 1/2. It's better to take distributions over many years to minimize the tax. Delaying withdrawals as long as you can also gives your retirement fund more time to grow.
Lower fees. Your 401(k) plan has administrative fees which will cut into your investment returns over the years. If you roll your money over to an IRA, you may be able to avoid paying administrative costs, especially if you don't sign up for investment management at a brokerage. Also, some 401(k) plans will charge an extra maintenance fee once you are no longer an employee. Check with your company to see if this fee applies to your plan.
401(k) changes. Your 401(k) investment choices, trustees, and fees can all change at any time. If you don't work there, you might not get the latest information as quickly as those who do. When these big changes are scheduled to occur, the employer usually holds information sessions to communicate the changes. If you don't work there, these in-person sessions may not be available to you. If you don't pay close attention to your 401(k) statements, you might not even know about the changes until after they occur.
More control. Most 401(k) plans have restrictions. My previous employer will not let me invest the employer contribution portion of my 401(k) account. This portion is invested in a "global diversified" investment that has no ticker. I'm not willing to live with these restrictions once I'm no longer an employee. I want total control of my investments, and that's why I'm in the process of rolling over my 401(k).
Employer stock. It's hard to believe, but many employees still have a large portion of their 401(k) invested in their employer's stock. Some companies invest their employer contribution straight into company stock. This is a bad idea because there are too many eggs in that basket. If your employer goes out of business, you could lose not only your job, but also your retirement savings. Read up on Enron if you think investing in your employer's stock is a good idea.
Better investment choices. Most 401(k) plans have very limited investment choices. Unfortunately, many of these funds are of the high fee and high expense ratio variety. If you roll your money over to an IRA, then you can invest in anything you want to. Some investors might want to invest in individual stocks, and that's easy to do in an IRA. I'm more partial to low-fee Vanguard funds, and I can pick any of them in an IRA.
Consolidate and simplify. Workers who frequently change jobs can end up with several different 401(k) accounts if they don't roll them over into an IRA. It's much easier to check on your investments if they are all in one IRA instead of many 401(k)s. A single IRA also makes it much easier to revamp your investments. You will be surprised at how much in fees you are paying as your 401(k) balance grows. I found out I paid $1,754.91 per year in fees, and that's not acceptable.
There are many things to deal with when you leave your job or career, but don't forget about your retirement account. This could be your largest investment if you work with one employer for a long time.
Joe Udo is planning an exit strategy from his corporate job by reducing expenses and increasing passive income. He blogs about his journey to early retirement at Retire by 40.
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7 Reasons to Rollover Your 401(k) After Retirement
Mutual of America Expands Retirement Education Campaign; Highlights National Save for Retirement Week
Posted: October 18, 2012 at 12:23 am
NEW YORK, Oct. 17, 2012 /PRNewswire/ -- Mutual of America is expanding its current "Save More for Your Retirement" customer education campaign to shine a spotlight on National Save for Retirement Week, which Congress has designated for the week of Oct. 2127.
The Company's "Save More" campaign emphasizes the advantages of participating in a workplace retirement plan, including how it can help individuals save more and plan for a financially secure future.
Throughout the week, and beyond, Mutual of America will conduct on-site group presentations for its clients and their employees, highlighting the following points:
In addition, the Company will provide clients and their employees with an assortment of print and electronic materials that offer insights on saving for retirement and will spotlight educational articles and retirement calculators online at mutualofamerica.com.
"National Save for Retirement Week is a great opportunity for individuals to think about where they're at with their retirement goals and how to effectively plan and save for their future," says William Rose, Mutual of America Executive Vice President and Chief Marketing Officer. "Mutual of America is dedicated to providing our customers with the knowledge, resources and help needed to achieve their goals, before and during retirement."
About Mutual of America
Mutual of America specializes in providing retirement products and related services to organizations and their employees, as well as to individuals. Since 1945, Mutual of America has remained committed to offering plan sponsors, plan participants and individuals carefully selected, quality products and services at a competitive price and the personal attention they need to help build and preserve assets for a financially secure future. For more information, visit mutualofamerica.com.
Before investing in our variable accumulation annuity contracts, you should consider the investment objectives, risks, charges and expenses (a contract fee, Separate Account expenses and Underlying Funds expenses) carefully. This and other information is contained in the contract prospectus or brochure and Underlying Funds prospectuses. Please read the prospectuses and brochure carefully before investing. The prospectuses and brochure can be obtained by mail or by calling 1-800-468-3785.
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Mutual of America Expands Retirement Education Campaign; Highlights National Save for Retirement Week
Seven Things You Must Know About the 'New Retirement'
Posted: at 12:23 am
This isn't your daddy's retirement. And it's not for the faint of heart.
Do-it-yourself 401(k)s, IRAs and multiple-choice Medicare supplement plans have taken the place of the company pension plan, retiree health benefits and a gold watch.
And working into retirement -- in the form of a second (or third) career or part-time job -- is becoming the norm.
"It's a changing landscape," says Sara Rix, a senior strategic policy adviser with AARP.
But this evolution hasn't happened overnight, she says. "Some of the changes we're seeing began 20 to 25 years ago."
One major adjustment: People are working longer. In 1985, there was fewer than 1 in 5 65- to 69-year-olds in the workforce, Rix says. Today, it's almost 1 in 3 -- a 74% increase.
Some would-be retirees need the money, says Rix. Others enjoy their jobs and want to keep at it. And, for some, it can be a combination of the two.
Whether you're 25 or 75, you should know these seven things about retirement in the new millennium.
You're on your own
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Seven Things You Must Know About the 'New Retirement'
Do I Need Life Insurance in Retirement Financial Planner Jeff Vogan Tucson Mesa Arizona – Video
Posted: October 17, 2012 at 7:17 am
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Do I Need Life Insurance in Retirement Financial Planner Jeff Vogan Tucson Mesa Arizona - Video
Should Ray Lewis Retire? – Video
Posted: at 7:17 am
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Should Ray Lewis Retire? - Video
Use Football-Style Retirement Planning
Posted: at 7:17 am
As I was watching my favorite team play last week, which didn't involve much actual playing on their part, I kept seeing football-meets-retirement-planning analogies everywhere.
Pay attention to your o-line. Protecting the quarterback with a strong offensive line will repay you with superior returns. A quarterback with his head on straight can concentrate on making good passes rather than worrying about some crazy linebacker breaking through for a sack.
If you're quarterbacking your own retirement savings, your retirement strategy is your offensive line. Sure, your line will periodically fail and let someone through. (And you will occasionally drop the ball or make a bad pass.) But your retirement strategy, like a good offensive line, will allow you to keep your head in the game and feel confident in the next down. It will keep you from looking over your shoulder every time the market shows a little volatility.
Look at your quarterback rating. Like quarterbacks, good mutual fund managers should have a steady track record. Don't choose a quarterback or fund manager who's streaky--you know the guy with the great arm who turns into a head case when he faces a strong blitz. Good managers perform consistently and predictably year after year.
Play all four quarters, and don't be afraid to run up the score. Unlike football, it's good sportsmanship to run up the retirement savings score, so play your first string the whole game. In other words, keep your head in the game the whole time. Don't become overly confident when you notice you've got a decent lead--or tidy sum in your nest egg. Keep pushing. Keep strategizing. Keep researching. Keep seeking advice and increasing your contributions. Keep playing defense. Keep looking for ways to earn more, spend less, save more, invest better and take less risk. Keep your head in the game for all 60 minutes.
Every team has a kicker, but some kickers add a lot more value. When two well-matched teams meet, a good kicker can make all the difference. In retirement planning, the highest-risk asset class in your allocation is akin to a kicker. It's not taking up a huge percentage of playing time (or your allocation), but a high-quality investment from the aggressive end of the asset class spectrum could put the ball through the goal posts when poorer-quality funds from that asset class are choking.
Run the ball a lot. It's not fancy, but it's reliable. Trick plays and big passes won't serve you well in retirement planning. Pound forward with consistency. Sure, you'll throw too. Sometimes you'll notice changing market conditions, and you'll run the option, reallocating to take advantage of whatever the economy (or the defense) is throwing your way. But, even when you call an audible, play with the same overarching strategy that focuses on consistent, long-term results. Remember that your choices during the first three downs of a series will determine where you are for the fourth. Make good, consistent choices for three downs so that you're left with several good choices on fourth down.
Don't go for the Hail Mary if you're nearing retirement and the score isn't where you'd hoped. Unlike football, where points cannot be lost, aggressive and foolish retirement plays could set you back years. It's fun to think about retirement planning in terms of football, but your retirement strategy is serious business. Football is a game. A poor season or a big loss will hurt when your favorite team is on the losing end, but it's still just a game. Retirement planning is your life, and you only get one lifetime to save and invest for retirement, so make it count.
And remember this: even when you face setbacks, the game isn't lost. Lucky for you, you can influence the retirement strategy game because you can control the length of time you play, the quality of the players, the number of players, the amount of money you spend on them, and so much more. My favorite football coach wishes he could do that--especially last week.
Scott Holsopple is the president and CEO of Smart401k, offering easy-to-use, cost-effective 401(k) advice and solutions for the everyday investor. His advice has been featured on various news outlets, including FOX Business, USA Today and The Wall Street Journal.
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Use Football-Style Retirement Planning
Avoid a depressing retirement
Posted: at 7:17 am
10/16/2012 7:00 PM ET
By Ashlea Ebeling, Forbes.com
Successful retirees know how to adjust to life after work, a new book maintains. The process starts with the right attitude and good planning.
In retirement, you must be reborn or face withering away. That's the premise of the new book "The Retirement Maze," which explores tactics to help retirees on the path to a new and improved retirement. It looks at who would benefit from taking a "bridge" job and why it's important to build non-work-related friendships before retirement. It also recommends that retirees have more sex. Seriously.
"When you retire, you're going through a major life change; you have to reorient yourself to figure out who you are," says co-author Dr. Louis Primavera, 68, a psychologist and former marriage counselor and now dean of the School of Health Sciences at Touro College. Co-author Rob Pascale, who retired at age 51 after 31 years in corporate market research, floundered at various ventures, including importing produce, before returning to social science and working on the book.
It's not a typical "rah-rah book that tells you how great retirement is" (Primavera's words) or a personal finance book, but instead a book about how folks adjust to retirement overall, for better or worse.
The authors reviewed existing retirement literature, surveyed 1,500 retirees and 400 pre-retirees online, did in-depth in-person interviews and reflected on their own experiences. Their conclusion? You have a better chance of success if you're mentally ready to leave the workforce and have a well-thought-out retirement plan.
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Avoid a depressing retirement
Prudential Retirement adds four new plan sponsor clients
Posted: at 7:17 am
NEWARK, N.J.--(BUSINESS WIRE)--
Prudential Retirement, a business unit of Prudential Financial, Inc. (PRU), today announced four new plan sponsor client wins: NETGEAR, Upstate New York Power Producers, Inc., Norcal Beverage and Stone Bridge Cellars.
We are delighted to have these companies as new clients and we look forward to preparing their participants for their Day One of retirement, said George Castineiras, senior vice president, Total Retirement Solutions, Prudential Retirement. Prudential Retirements continuous service improvements and product innovations are the crucial elements that are important to intermediaries and new clients.
NETGEAR, a San Francisco-based global networking company that delivers innovative products to consumers, businesses and service providers, joined Prudential on June 1. Marte Werner from NWKGroup, was the advisor to the $25 million deal. The defined contribution plan has more than 300 participants.
Upstate New York Power Producers, Inc., based in Wallingford, Connecticut joined Prudential on August 27. The 401(k) plan has roughly 175 participants and $20 million in assets under management.
West Sacramento, Calif.-based Norcal Beverage, the largest independent co-packer of teas, chilled juices, waters, and energy drinks west of the Mississippi, joined Prudential Retirement on May 1. The company, which also manages delivery for the nations largest brewery, the largest beer importer, and the largest West Coast craft brewery, along with several smaller boutique breweries, has $19 million in plan assets and roughly 500 plan participants.
Norcal Beverage was impressed with Prudential Retirements plan participant Web site and the level of customer service the firm could provide, said Terri Erwin, corporate human resources director. David Loeffler, first vice president and investment officer at Roseville, Calif.-based Wells Fargo Advisors, was the advisor to the deal.
Stone Bridge Cellars, which operates as Joseph Phelps Vineyards, a Saint Helena, Calif.-based producer of up to 80,000 cases of cabernet sauvignon, chardonnay, and dessert wines a year, joined Prudential on May 1. The plan has roughly 144 participants and $9 million in assets under management.
For any recordkeeper to be considered, we require an open-architecture investment platform allowing us to select institutionally priced investments without any limitations, completely transparent expenses and competitive service and technology offerings, Rick Wedge, managing director at San Francisco-based Pensionmark and the advisor to the deal, said.
Pensionmark also takes the time to understand our clients culture as best as possible to help guide the vendor selection process, Wedge continued. Educating a diversified work force was a key deciding factor in the selection of Prudential Retirement.
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Prudential Retirement adds four new plan sponsor clients
17 Frightening Facts About Retirement Savings in America
Posted: October 16, 2012 at 9:28 am
By John Reeves | More Articles October 15, 2012 |
Investing great John Bogle, founder of The Vanguard Group and champion of the index fund, believes our nation's retirement system is headed for a serious train wreck. Anyone who looks objectively at the evidence would have to agree with him.
I recently examined several outstanding research studies on the state of retirement savings in America, and here are some of the alarming facts that I discovered:
These are just some of the facts that are included in the studies referenced above. For more detail, I'd encourage you to read the studies in their entirety.
One big takeaway is that many Americans are saving far too little for their retirement. And many of those individuals who are saving are making costly errors that result in poor investing returns. Bogle believes that our society tends to be wired for short-term thinking when it's long-term strategies that are most needed right now in tackling this retirement crisis.
In order to better understand this crisis, we've put together series of articles that take a deeper look at the important challenges facing our retirement system. In "5 Huge Myths About Social Security," Ilan Moscovitz examines our widely misunderstood Social Security system. In another commentary, Sara Murphy explores the question of whether 401(k) plans are a failed experiment. Finally, in a concluding commentary, I put forward some ideas for possibly improving our overall retirement system. We hope you enjoy the series!
To read all of the articles in this series, click on the following links:
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17 Frightening Facts About Retirement Savings in America
How to Make Your Retirement Savings Last
Posted: October 15, 2012 at 5:25 pm
I have about $700,000 and plan on retiring soon at age 62. How can I make this money last at least 30 years? -- Steve, Vevay, Ind.
Making sure your money lasts isn't your only goal for retirement. Presumably, you also want to be able to draw enough from your savings to live relatively comfortably the rest of your life. And I assume you would like to have some flexibility about how you tap this nest egg, so you can fund not just regular living costs but unexpected expenses and the occasional splurge.
I mention this not to quibble, but because understanding that you actually have several goals is important when deciding how to manage your $700,000 stash.
If making sure you didn't outlive your nest egg were your only consideration, you could simply put your entire 700 grand into an immediate annuity, a type of investment that gives you a monthly check the rest of your life. As long as you're prudent about how you go about it -- sticking to highly-rated insurers, spreading your money among enough companies to assure you're fully covered by your state's insurance guaranty association -- you could sit back and collect $3,600 a month, possibly more, for as long as you live.
But you would also give up something -- namely, access to your money. Once you buy the annuity, you can no longer dip into your stash for emergencies and such. You receive only the monthly payments. And unless you buy an immediate annuity with an inflation rider -- which usually means accepting an initial payment that's about 25% less than one without inflation protection -- the purchasing power of your monthly check will decline throughout retirement.
Such shortcomings are why putting your entire stash in an immediate annuity probably isn't the right way to go.
There's another option, however, that can give you the flexibility you need, plus a good shot at inflation protection. Just invest your 700 grand in a relatively conservative mix of stock and bond funds -- say, 50% stocks-50% bonds -- and withdraw the cash you need each year.
To increase the odds that your money will last at least 30 years, you could follow what's commonly referred to as the "4% rule" -- that is, withdraw 4% of your nest egg's value the first year of retirement, $28,000 in your case, and increase that amount by the inflation rate each year to maintain your purchasing power.
Although the probability can vary depending on the assumptions you make about inflation and investment returns, there's roughly an 80% chance your money will last at least 30 years if you follow this regimen. Plus, you would have the opportunity to dip into your stash for extra cash should you need it.
But this approach has drawbacks, too. One is that while your chances of running out of money too soon are low, they're not zero. There is still a meaningful risk. That's especially true if your investments take a big hit early in retirement. In that case, the combination of investment losses, plus withdrawals could so deplete your portfolio's value that your nest egg could run dry well before 30 years.
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How to Make Your Retirement Savings Last